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Evening Capsule: A look back at the financial markets for the day
Publish date: 22nd November, 2019
Stock markets are known for their volatility. But it can also be quite an exciting roller-coaster ride. Some find it interesting and enthralling. Others find it worrisome.
Irrespective, if you're a stock market trader or investor, you need to keep yourself up-to-date with stock market developments.
Here’s a summary look at the stock market trends and developments today:
Nifty closes lower at 11,914 (-54 point); Sensex also ends weak at 40,359 (-216 points)
The Nifty and the Sensex ended the week with cuts as traders were unwilling to carry positions over the weekend in the midst of all the uncertainty in the market. The VIX has continued to trend lower below the 15 mark. A/D ratio was weak at 21:29 on Friday. Pressure came from IT and telecom stocks while metals and power PSUs like NTPC held the markets up.
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The good, the bad and the ugly – history of the stock markets
Behavioural Finance – Keeping investor emotions in check
Here is why equity rules the roost and will continue to rule the roost
Finding value in mid cap stocks
10-year bond yeilds marginally lower at 6.500% at 3.40 pm on Friday
On the last day of the week, the bond markets have been fairly tepid as yields are quoting at about 6.5% compared to 6.51% close in the previous trading session. The expectation in the market is still quite strong that the RBI will look at a series of rate cuts starting December and that is holding yields lower. The bond yields at the short end of the yield curve have also been tepid due to liquidity.
Related reads:
5 ways in which US interest rate hike impacts India
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What can you learn by tracing bond yield movements?
How interest rates affect equity markets?
The rupee marginally weaker by 4 bps to 71.794/$ at 3.40 pm on Friday
The rupee has been largely range-bound on Friday after a fairly volatile week of currency trading. The RBI has been supporting the INR at around the 72/$ levels and that has held the markets in good stead. On the positive side, the FPIs bought heavily into the markets on Thursday and that has given some support to the market. The rate cut would actually work against rupee strength.
Related reads:
How does RBI defend the falling rupee?
The positive side of rupee depreciation
4 things to know about rupee value and exports
Is hiking import duty the best way to prevent the rupee falling?
Brent crude largely flat at $63.95 /bbl at 3.40 pm on Friday
The Brent Crude has been almost flat at around the range of $64/bbl where it closed on Thursday. The oil prices rallied sharply on Thursday on the back of instability in the Middle East and some major supply concerns coming from Iran, Iraq, Venezuela and Algeria. The recent drone attacks on Saudi Arabia have also been instrumental in creating a sense of concern in the oil markets.
Related reads:
The impact of oil prices on Indian stock markets
6 effects of rising crude on the Indian economy
3 reasons why rising oil prices bother India
Sectoral Viewpoint: Metals and media rally; IT and banks take a hit
Metal stocks continued to rally on Friday on hopes that the trade deal would be seen through after assurances from Xi Jinping over the first cut trade deal. Media continued to rally due to the Zee effect. On the downside, IT stocks took a hit after the visa issue has come up all over again. Banks also saw some profit banking over the week end after a sharp rally through the last two weeks.
Related reads:
Why we have an Add call on PNB
Why we have an Add call on Britannia
Why we have a Sell call on Hindustan Unilever
Why we have a Reduce call on Lupin
Why we have an Add call on Aurobindo Pharma
Why we have a Reduce call on TCS
Why we have an Add call on Infosys
News that markets reacted to
- RBI has constituted an advisory committee to assist in the bankruptcy proceedings of Dewan Housing Finance. DHFL had defaulted on loans in excess of Rs.80,000 crore. Once the company has been referred to bankruptcy, the committee will first make an estimate of how much is recoverable and how much has to be written off. The norm in such cases has been 50%.
- Fitch has raised some major questions over the prospects of the telecom sector in India. According to Fitch, the AGR charges are likely to pose a major burden on the telcos and the combination of SUC moratorium and the recent tariff hike is unlikely to offset the impact of the AGR charges. Telcos have already written off their AGR costs in the second quarter.
- For the first time in the last five years, ICICI Bank is quoting at a premium to the valuations of Axis Bank. Since the NPA issue first came to light in both these banks some 5 years back, Axis has consistently been at a premium. The Axis premium had widened during the whistleblower complaint against the former CEO. Finally, ICICI Bank appears to be getting back to old P/Es.
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By: Sandhya Kannan, Head – Content
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